Poland jobless service proved useless by economist

Joanna Tyrowicz, assistant economics professor, speaks during an interview at the National Bank of Poland in Warsaw, Poland, on Wednesday, April 10, 2013. (BLOOMBERG)

A pedestrian passes the headquarters of the National Bank of Poland (NBP) in Warsaw, Poland, on Wednesday, April 10, 2013. (BLOOMBERG)

Joanna Tyrowicz takes action when she’s got a point to make. Rather than writing scientific papers about the inefficiencies of the Polish government unemployment service, the assistant economics professor had her students send e-mails to 416 job centres across Poland. They purported to be from a company seeking to hire a driver, a warehouse cleaner, an accountant and a salesperson.

Only nine of the employment offices posted the offer on their bulletin board or website, while about 300 didn’t reply. The rest asked for more detail.The service is “a completely redundant institution,” said Tyrowicz, 31, in an interview at the central bank in Warsaw, where she also works preparing reports for the rate-setting Monetary Policy Council. “It doesn’t collect postings, it doesn’t give postings to the unemployed, it doesn’t broker jobs. This has to be fixed.”

Tyrowicz, whom Andrzej Slawinski, the central bank’s chief economist, calls “a rising star of Polish economic science,” often challenges politicians on how they should tackle joblessness. The rate was 14 per cent in April, close to a six- year high.

Government jobs programs are an exercise in “pointless spending” and grants for the self-employed would be better directed toward companies that hire several workers, Tyrowicz told broadcaster TVN CNBC in a Jan. 8 interview.

‘Not Right’

And Finance Minister Jacek Rostowski should stop curbing the budget deficit by limiting the release of money from the state labor fund. “It’s not right that the finance minister decides how much we spend on job creation,” Tyrowicz said. “There’s no reason to praise him just because the Labor Ministry is bad.”

"She’s not a person sitting modestly,” said Jan Jakub Michalek, dean of the faculty at Warsaw University, where Tyrowicz teaches. “On the contrary, she’s a person to say, ‘I have my argument, I want to present it, you have to listen to me.’ She’s well-equipped to make an important contribution.”

Jan Svejnar, a professor of global political economy and director of the Centre for Global Economic Governance at Columbia University in New York, says Tyrowicz’s importance is spreading globally. The two met at a conference a few years ago -- she counts him among her mentors -- and are working together on a research project assessing the impact of privatization on company performance.

Cross-Fertilization

“She really has the unique ability to be a Renaissance person in terms of having the state-of-the art tools of both theory and econometrics and the ability to apply it to a wide range of issues,” he said in a phone interview. “Her work is read by researchers elsewhere so there is definitely a cross- fertilization.”

Tyrowicz -- who earned her doctorate at 24, five years younger than is typical in Poland -- is the country’s second- most-cited female economist, according to the RePec online database of 36,303 economists registered worldwide. No. 1 is Joanna Janczura, who teaches at Wroclaw Polytechnic University.Warsaw University ranks No. 1 among the nation’s economics faculties in Poland and is among the top 7 per cent globally, according to the RePec database, which includes 12,681 economics institutions.

“Joanna Tyrowicz is one of the people who is helping close the gap between Polish scholarship and the cutting edge of European economics, as measured by publications in prestigious journals,” wrote the committee that evaluated her doctoral thesis.

Three Years

When she studied at the Warsaw’s Faculty of Economics, Tyrowicz did everything faster than other students, according to Barbara Liberda, a professor in development economics who taught her at the time. In 2002, she finished in three years what is usually a five-year master’s program. Two years later she got another economics master’s degree, at the University of Leuven in Belgium.Last year Tyrowicz cleared all the formal hurdles, including completing a second doctoral dissertation, toward becoming a full-fledged professor, with tenure likely in a few years. The usual age for reaching that point is 37 to 40, Michalek said in an interview at his office

“She’s certainly one of the most ambitious people I’ve ever seen,” Michalek said.

Too Forceful

That doesn’t sit well with everyone. He recalled a colleague who taught Tyrowicz at the university complaining about a “forceful” young student and predicting that it would be very difficult for her to build a career. While Tyrowicz has now passed all the hurdles for tenure, this teacher still hasn’t, Michalek said.“His first impression wasn’t very correct,” he said.

When still in secondary school, Tyrowicz won a national history contest, for which she was rewarded by a fellowship at the Jozef Pilsudski Institute of America, a New York-based research centre on Polish history.She says she didn’t initially plan to be an economist but chose the field after completing an International Baccalaureate degree at Copernicus High School in 1999. Economics fitted with the subjects she liked most: history, mathematics and languages. She speaks English and French fluently.

“Not too many people making such an irrational choice as myself turn out to have such a good profession,” Tyrowicz said in a minimalist meeting room in the eight-story mosaic-fronted modern headquarters of National Bank of Poland. “I never dreamed of economics, but I turned out to like it a lot.”

Housing Shortage

Tyrowicz and her younger sister grew up in Warsaw in a middle-class family. The two girls shared a 36 square-meter (388 square foot) apartment with their engineer father and chemist mother because of a housing shortage in then-communist Poland.

In early primary school, Tyrowicz came to understand the concept of inflation during the economic chaos that followed communism’s collapse starting in 1989. She was often sent to fetch groceries when she was about 10 and her parents had to give her more money every week to buy the same items.

Describing economics as “a job you never leave,” Tyrowicz spends the little free time she has after her academic work, central-bank responsibilities and commenting on television volunteering for civil-rights and humanitarian nonprofit groups, playing sports such as sailing, skiing and tennis, and cooking and taking long walks with family and friends.

Most Admired

The economist she admires the most is Olivier Blanchard, chief economist of the International Monetary Fund and a former professor at the Massachusetts Institute of Technology in Cambridge. Though they’ve only met a few times, she tries to follow his writings.“From the perspective of someone who tries to do some research and not groundbreaking research, everything he does is just purely genius,” she said. “And the way he writes his papers is so simple, you can explain it to a five-year-old.”

Her research papers have covered a wide range of topics, from Poland’s future euro membership -- joining has been pushed back due to Europe’s debt crisis -- to investment decisions of companies listed on the Warsaw Stock Exchange to the link between foreign direct investment and productivity.The central bank’s Slawinski says Tyrowicz’s biggest achievement so far has been showing the root causes of “relatively high” joblessness in Poland. Its lasting impact poses a challenge to policy makers, he said in an e-mail.

Human Costs

Unlike in Spain, where unemployment is mostly the result of economic boom-and-bust cycles, the principal cause of Polish unemployment is a botched transition from a command-driven economy to a market system in the 1990s. A bloated public sector collapsed “too fast,” Tyrowicz said, adding that the human costs were high.“The real problem is not people without jobs but firms that don’t create jobs,” Tyrowicz said in an e-mailed response to questions. “What I recommend we start doing is engage a whole set of instruments that will encourage job creation -- tax rebates/credits, subsidizing non-wage employment costs.”

The most influential part of her work, she said, is the analysis she does at the central bank. She was asked to take the job in the research department after the person who had it left.“She’s putting enormous effort into preparing materials for the Monetary Policy Council,” said her boss, Michal Gradzewicz, director of the Bureau of Enterprises, Households and Markets. “She’s very good at interpreting the data on the trends we’re seeing in the development of the labor market.” Her work “is important not only for Poland but also for the whole society of economists. She’ll be more known in the future than she is now.”

Best Thing

Tyrowicz described joining the research department as “the best thing that could have happened to me.” The bank is “a unique research institution. It attracts the best people who have experience from abroad so they keep better standards.”

She said one of her projects helped change viewpoints at the central bank by debunking the myth that the unemployed have unreasonable wage expectations.“We were able to find that this isn’t true, except for the young,” Tyrowicz said. “They are unemployed because there are too few jobs, not because they don’t want to work for the wages that they’re offered. What we find is that it’s on the job- creation side and not on the labor-supply side.”

She said officials “haven’t responded. It’s going to take a decade to realise something.”

Getting Frustrated

Tyrowicz can get frustrated when she’s not listened to.In her 2009 paper, titled “Breeding One’s Own Sub-Prime Crisis: The labor market effects on financial system stability,” co-authored with Tomasz Daras, she explored the risks to mortgages denominated in foreign currency if unemployment increased. They suggested a method to resolve the issue that wouldn’t increase government spending.

She then received a call from Michal Boni, adviser to Prime Minister Donald Tusk, who said the government would draft legislation based on their recommendations, she recalled.

“Only they wouldn’t listen to us in the process,” she said. “The instrument wasn’t fiscally neutral -- it increased expenditure -- and the eligibility criteria were stupid.”“They thought they were smarter than us,” she said. “It was a very bad experience.”

Boni said through a spokesman that he had told Tyrowicz the government would study the paper.As evidenced by her fake-job-postings campaign, topics close to Tyrowicz’s heart are how Polish public unemployment services are organized and how money is spent on labor-market policies.

Wrong Strategy

The Ministry of Labor and the Ministry of Regional Development announced last month that they would channel more funds into unemployment services from the European Social Fund. Tyrowicz says that’s the wrong strategy.

“It makes no sense to put more water in a leaking pot,” she said by e-mail. “First fix the pot, then add water.” As for the future, Tyrowicz said she would like to cut down on teaching and focus more on research, but there’s one role for which she would stop doing everything else for a while.“I wouldn’t mind being labor minister for some time,” she said. “I don’t do politics very well. But that’s definitely a dream job.” She would more likely continue working with non- governmental organisations, where she feels she can make a difference, she said.

“She has enormous potential on the research side and on the managerial side,” said Zbigniew Polanski, an adviser at the central bank and professor at the Warsaw Business School. “I think she has the personality to be a strong leader. I’m not sure if she’s fond of doing this but she has the personality and probably it will happen sometime.”